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Chapter 7 - Chapter 7 Exerciseh Key terms 1 Adaptive...

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Chapter 7 Exerciseh . Key terms 1. Adaptive Expectations 2. Efficient Market Hypothesis 3. January Effect 4. Random Walk 5. Unexploited Profit Opportunity. . Multiple choice 1. The view that expectations are formed from past experience as some kind of average over past observations, and hence change only slowly over time as past data change, is known as: a. optimal statistical forecasting. b. adaptive expectations. c. inertial statistical inference. d. rational expectations. e. risk aversion. 2. The view that expectations make optimal use of all available information, and hence are optimal forecasts, is known as: a. adaptive expectations. b. optimal statistical decision theory. c. rational expectations. d. optimal information theory. e. optimal adaptive inference. 3. The major criticism of the view that expectations are formed from past experience as some kind of average over past observations is that: 4. According to rational expectations: 5. According to the Efficient Market Hypothesis in the form presented by Mishkin on page 150 of his text, the current price of a stock share:
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